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Bidstack boss in no doubt it is on road to gaming glory

It’s a new field, so new in fact that the UK regulator the Internet Advertising Bureau (IAB) has yet to set out standards for the sector.

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The new consoles from Microsoft (Xbox) and Sony (PlayStation) are due for release later in 2020

A new generation of game consoles launch later this year and like many in the gaming space, Bidstack PLC (LON:BIDS) will be watching closely to see how the pieces fall.

James Draper, Bidstack’s founder and Chief Executive, says that the upcoming launches of the new  Xbox and Playstation consoles will be especially interesting given the launch of Google’s online gaming platform Stadia, last year.

Draper, too, has reasons for keeping a very close eye on how the gaming market reacts to the new hardware.

Bidstack specialises in native in-game advertising or serving virtual equivalents of real world ads in the spaces within games such as pitchside billboards on virtual football matches and racing games or into the backdrops for action or adventure games.

It’s a new field, so new in fact that the UK regulator the Internet Advertising Bureau (IAB) has yet to set out standards for the sector.

This is something that Draper believes Bidstack will be instrumental in helping to form.

Early-stage of the journey

With businesses at such an early stage of their development, the ride can be bumpy and so it has proved with Bidstack.

A profit warning in December took a toll on the share price, with the mood not helped by a sale of shares by Draper earlier in the year.

He told Proactive that a period of reflection since then has allowed him to reset where the business is currently and more importantly where it will be in the future.

Helping plan the route is industry heavyweight, Andrew House, who joined the company’s advisory board in February in an option-incentivised role.

House was Head of Sony Interactive Entertainment, and launched the Playstation 4 in 2013 and established the Playstation Network (PSN).

“In gaming terms, it’s an impressive resume and underlines Bidstack’s potential”, says Draper.

“He’s very much aware of what’s happening in the gaming landscape.

He understands what we are building out, what’s ahead of us, what we are working on and what type of deals we are cooking up.

It’s a big thing for him to be part of a microcap company on AIM and he wouldn’t be doing it ‘if we were all over the place’.”

House’s contacts are also likely to prove crucial as Bidstack continues to build an understanding of its concept in the gaming arena.

Education key to development

“Education is a key part of the process” says Draper.

"We spend a lot of time a lot educating the video game industry and also laying out the benefits from an advertiser’s perspective."

It is a process that takes time, you can't rush these things and skip to the end, he adds.

"We are attempting something that was technically impossible until very recently and it is critical to execute this correctly.”

“Tracking is a big challenge” he adds.

Unlike website ads for example, which are measured on metrics such as pay per click, conversions etc,

Bidstack is monetising impressions (this is when an advertisers’ creative renders on a user’s screen in game.)

By nature, you can’t and wouldn’t want to get a gamer to stop playing to navigate out to a product website or call to action, so this would make sense for Bidstack.

Bidstack has been working on methods to measure the number of times their ads are seen by the intended audience, which is vital in getting buyers to invest in the new ad format.

At the same time, it needs to reassure the gaming studios that the advertising won’t compromise the integrity of their games. Alienating their audience is a key area of concern for game publishers and Bidstack.

New consoles on the way

With the work that Bidstack is currently undertaking, Draper is confident all these issues are solvable and the commercial opportunity for studios, given the huge audience and the massive costs of actually developing these large scale games, is immense.

The new consoles from Microsoft (Xbox) and Sony (PlayStation) later in 2020 are expected to bring a transformation to the gaming industry.

Between them, and Google Stadia, they’re said to be in a race to become the Netflix of gaming’ to convert the much higher numbers of casual gamers who don’t typically pay hundreds of pounds per console and £50+ per game title.

In that environment, the monetisation of ad space will be critical.

Big prize lies ahead

Undoubtedly, Bidstack has a lot to do  - Draper himself says that investors have to be prepared to take a long-term view to see the full potential.

In a shorter time frame, revenues should improve substantially this year from the £150,000 booked in 2019 though only in the second half when a £10m, two-year agreement with a global marketing services group signed in December starts to contribute fully.

Losses in 2019 were £5.3m with cash of £3.2m at the year-end.

On those numbers, some additional funding is likely to be required soon but with Google seemingly now taking gaming seriously and preparing to challenge Microsoft and Sony, the long-term prize for Bidstack is off the scale.

Can it win it? Is the question.

Quick facts: BidStack Group PLC

Price: 6.5 GBX

LSE:BIDS
Market: LSE
Market Cap: £15.92 m
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